Commentary following MND’s announcement on VERS framework and BTO policies

SINGAPORE, 11 August 2025 – ERA’s comments on the potential changes to HDB policies regarding VERS and BTOs, are as follows.

Possible changes to the overall BTO income ceiling and BTO eligibility age for singles.

Lowering the BTO eligibility age for singles will likely boost demand for BTO flats by allowing more individuals to apply earlier. Similarly, raising the income ceiling will expand the pool of eligible buyers, further driving up demand for BTO flats.

The government recognises that these would drive up demand for BTO flats and may calibrate the changes according to the supply it can introduce in the near term. For instance, with application rates for first-time families having stabilised, and a surge of MOP units expected from 2026 onwards, demand from families should be manageable. As such, any adjustments to the income ceiling may be introduced as a fine-tuning of existing policies, with limited impact on overall demand, given that there should be adequate HDB flats to keep up with the demand in the market.

Conversely, demand for 2-room flats remains highly oversubscribed. Nonetheless, the government may err on the side of caution about flooding the market with excessive supply just to meet current demand. Instead, the government may undertake a deeper review of the underlying factors driving demand in this segment. In this context, reducing the age limit appears somewhat counterintuitive, given the government’s broader housing policy of nudging Singaporeans towards forming families and settling down.

The last review of the income ceiling was in 2019. Since then, housing prices have risen substantially, and with rising incomes and persistent inflation, it is timely to implement a revision now.. In 2024, the average household monthly income was $11,382,  16.6% higher than $9,763 in 2019.

Separately, with the changing demographics and a growing number of singles, this move signals greater inclusivity from the government’s perspective.

Key considerations for the success of VERS framework

Implementing such an exercise is a major undertaking, requiring sensitivity and prudence. Clear and definitive guidelines are likely to be set, akin to those governing private en-bloc exercise. For example, they may require a certain percentage of approval to go ahead with VERS. There are also concerns that compensation could be lower than under SERS. Therefore, this could lead to some older owners having to carefully weigh the affordability of replacement homes, and as a result, may be reluctant to participate in VERS. This could, in turn, dampen participation and increase the risk of unsuccessful exercises.

VERS plays a key role in addressing the impact of lease decay, though its execution is an uphill task given the need to balance the diverse needs of all owners. As such, we may a modest success rate initially. Understandably, VERS will require more in-depth analysis to cater to the varied needs of homeowners, particularly since HDB flats remain the primary housing type for most Singaporeans. Offering incentives, such as giving affected owners first priority in selecting a replacement home within their existing location, could help strengthen support and improve the likelihood of successful exercises.

We could expect owners of older flats built in the 1970s hoping their blocks will be selected for VERS, given the natural wear and tear that can make living conditions less attractive and comfortable over time. Ageing infrastructure, such as sanitary and water pipes, may also pose maintenance challenges and potential health concerns. Meanwhile, there may be structural safety concerns since these flats were built using building methods that have since evolved.

 

Table 1: HDB Towns with flats built in 1970s and 1980s

 

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Lisha Rodney
Public Relations Manager, ERA Singapore

Email: [email protected]

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